Q: Which among the following is a source of non-tax revenue for the government?

Non-tax receipts of the government are all those revenue receipts of the government that is not a part of tax receipts of the government be it a direct tax or indirect tax. For example - fees, fines, escheats, gifts and grants, interest and dividends on investment, etc.

Q: Budgetary control system acts as a friend, philosopher and guide to the _________.

A budget is a detailed plain of operations for some specific future period. It is an estimate prepared in advance of the period to which it applies. It acts as a business barometer as it is complete programmed of activities of the business for the period covered Besides' budgetary control' refers to a system of management and accounting control by which all operations and output are forecast as far as ahead as possible and the actual results, when known are compared with the budget estimates. Thus the term budgetary control is designed to evaluate the performance in terms of goals budgeted.

Q: Explain how the government can use the budgetary policy in reducing inequalities in incomes.

The budget of a government shows its comprehensive exercise on taxation and subsidies. 1. A government uses fiscal instruments of taxation and subsidies with a view of improving the distribution of income and wealth in the economy. 2. A government reduces the inequality in the distribution of income and wealth by imposing taxes on the rich and giving subsidies to the poor, or spending more on the welfare of the poor. 3. It will reduce the income of the rich and raises the living standard of the poor, thus, leads to equitable distribution of income. 4. Expenditure on special anti-poverty and employment schemes will be increased to bring more people above the poverty line. 5. Public distribution system should be inferred so that only the poor could get foodgrains and other essential items at subsidized prices. 6. Equitable distribution of income and wealth is a sign of social justice which is the principal objective of any welfare state in India.

Q: Which of the following is the most comprehensive measure of budgetary imbalances?

The extent of fiscal deficit is an indication of how far the government is spending beyond its means.

Question 1

Which of the following expenses are charged on the Consolidated Fund of India?

Accepted Answer

Consolidated fund of India is the most important government account. Revenues received by the government and expenses made by it,  are part of the Consolidated Fund. There are two types of expenditure made from the Consolidated Fund of India- voted and charged. Voted expenditures are those which are discussed upon in the parliament or legislature and later becomes the budget of the country. On the other hand, charged expenditure are those on which no voting takes place for the amount involved in these expenditures for their withdrawal from Consolidated Fund of India. This means that they have to be paid in any case, whether the budget is passed or not passed. Following are the charged expenditures:  1. Emoluments and allowances of the President and other expenditure relating to his office.2. Salaries and allowances of the Chairman and the Deputy Chairman of the Rajya Sabha and the Speaker and the Deputy Speaker of the Lok Sabha.3. Salaries, allowances and pensions of the judges of the Supreme Court.4. Pensions of the judges of high courts.5. Salary, allowances and pension of the Comptroller and Auditor General of India6. Salaries, allowances and pension of the chairman and members of the Union Public Service Commission.7. Administrative expenses of the Supreme Court, the office of the Comptroller and Auditor General of India and the Union Public Service Commission including the salaries, allowances and pensions of the persons serving in these offices.8. The debt charges for which the Government of India is liable, including interest, sinking fund charges and redemption charges and other expenditure relating to the raising of loans and the service and redemption of debt.9. Any sum required to satisfy any judgment, decree or award of any court or arbitral tribunal.10. Any other expenditure declared by the Parliament to be so charged.

Question 2

Which one of the following is not an objective of government budget?

Accepted Answer

The government frames its budgetary policy with an aim of achievng a set objectives. Some of the objectives are: 1)High rate of GDP growth2)Balanced Regional growth3)Allocation of resources4) Redistribution of income and wealth5) Employment opportunities6) Economic stabilityTherefore, increasing regional disparities is not an objective of government budget.

Question 3

Which among the following is a source of non-tax revenue for the government?

Accepted Answer

Non-tax receipts of the government are all those revenue&#10;receipts of the government that is not a part of tax receipts of the government&#10;be it a direct tax or indirect tax. For example - fees, fines, escheats, gifts and grants, interest and dividends on investment, etc.

Question 4

Budgetary control system acts as a friend, philosopher and guide to the _________.

Accepted Answer

&#10;&#10;A budget is a&#10;detailed plain of operations for some specific future period. It is an estimate&#10;prepared in advance of the period to which it applies. It acts as a business&#10;barometer as it is complete programmed of activities of the business for the&#10;period covered&#10;Besides' budgetary control' refers to a system of management and accounting&#10;control by which all operations and output are forecast as far as ahead &#10;as possible and the actual results, when known are compared with the budget&#10;estimates. Thus the term budgetary control  is designed to evaluate the&#10;performance in terms of goals budgeted.&#10;&#10;

Question 5

What are the main components of budget?

Accepted Answer

Budget is a statement of the estimates of the government receipts and government expenditure during the period of the financial year. There are two main component of a budget: 1. Receipts - It refers to the estimated money receipts of the government from all sources during the fiscal year.2. Expenditure- It refers to the estimated expenditure of the government related to its developmental and non developmental programs during the fiscal year.

Question 6

Explain how the government can use the budgetary policy in reducing inequalities in incomes.

Accepted Answer

The budget of a government&#10;shows its comprehensive exercise on taxation and subsidies.&#10;&#10;1.     &#10;A government uses fiscal&#10;instruments of taxation and subsidies with a view of improving the distribution&#10;of income and wealth in the economy.&#10;&#10;2.     &#10; A government reduces&#10;the inequality in the distribution of income and wealth by imposing taxes on&#10;the rich and giving subsidies to the poor, or spending more on the welfare of the&#10;poor.&#10;&#10;3.     &#10; It will reduce the income of the rich and raises the living standard of the poor, thus, leads to&#10;equitable distribution of income.&#10;&#10;4.     &#10;Expenditure on special&#10;anti-poverty and employment schemes will be increased to bring more people&#10;above the poverty line.&#10;&#10;5.     &#10;Public distribution system&#10;should be inferred so that only the poor could get foodgrains and other&#10;essential items at subsidized prices.&#10;&#10;6.     &#10;Equitable distribution of&#10;income and wealth is a sign of social justice which is the principal&#10;objective of any welfare state in India.

Question 7

Differentiate between revenue budget and capital budget.

Accepted Answer

The main differences between the two are: (i) Revenue budget comprises only revenue receipts and revenue expenditures of the government, while capital budget comprises of capital receipts and capital expenditures of the government. (ii) Revenue budget include all such financial transactions which do not create any asset or liability for the government. On the other hand, transactions in capital budget do create assets or liabilities for the government.

Question 8

Explain the following objectives of government budget.(a) Allocation of resources(b) Reducing income inequalities.

Accepted Answer

(a) The private sector is interested in industries that maximise profits, while the government aims at welfare maximisation. The government through its budgetary policy aims to reallocate the resources according to economic and social objectives. This is done through giving subsidies, tax concessions etc to encourage investment in socially important areas. The government can also discourage production of harmful goods like liquor etc through heavy tax duties.(b)  In India government&#10;uses progressive taxation i.e. people belonging to higher income levels have to pay more tax and people in lower income groups are levied less tax. People with income below a certain level are not required to pay tax altogether. The government uses these tax collections to provide basic amenities like healthcare, education etc to the poor at free of cost or at minimal charges.

Question 9

Explain how government budget can be helpful in bringing economic stabilization in the economy.

Accepted Answer

The government also aims at insulating the economy from major fluctuations (like inflation. unemployment) and business cycles such as boom, recession, depression and recovery. The government through its budgetary policy tries to combat such situations. The major concern of government is to achieve higher economic growth rates while maintaining price and employment stability. This state of economic growth with stability ensures a smooth and efficient functioning of an economy.

Question 10

Which of the following is the most comprehensive measure of budgetary imbalances?

Accepted Answer

&#10;&#10;The extent of fiscal&#10;deficit is an indication of how far the government is spending beyond&#10;its means.&#10;&#10;